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Buying investment property into a pension

If you want to buy property with your pension, SMP can provide you with the structure in an efficient and cost effective manner.

What are the advantages of owning a property through a pension?

The main advantage of saving through a pension is that you receive full tax relief on money you contribute. In practical terms, this effectively doubles your money on day one.

However there are further advantages when you compare owning property within a pension or owning it directly:

Property directly owned Property in a pension

Capital gains tax payable at 33% gains on sale No tax payable on gains

Income tax payable on rents No tax payable on rents

Why are people buying pension into their property?

We live in a time where fixed returns are hard to find. If you put your money in the bank, you will do well to earn 0.5% interest. Put it in bonds of any quality and the income generated will also be modest. This has caused people seeking fixed returns to look elsewhere most often to property and interest paying private investments.

What type of property can I buy?

Property can be bought through a professionally managed fund structure. However it is also possible to own a bricks and mortar property investment directly through your pension. When it comes to properties directly owned by your pension, both residential and commercial properties are allowable. There is very little restriction on what you can buy as long as the property is for investment as opposed to trading purposes.

Can I borrow money to buy property in my pension?

Yes. This is possible however typically pension property investors borrow a lower percentage of the value of the property, perhaps up to 50%. Obtaining the loan may be slightly more complicated then obtaining a conventional mortgage and having a good banking relationship is helpful.

Can I buy property into my existing pension scheme?

Most likely not. Most conventional pension structures will not allow you to purchase assets outside of the range of funds offered by the company with whom the pension is held. In order to purchase property you will need a self directed insured structures or alternatively a self administered structure held with a professional trustee, preferably the latter as they provide greater flexibility.

If I change structure, can I keep my existing investments?

For the most part, yes. You existing investments can be transferred to your new scheme “in species”. Alternatively, it is allowable to have more than one pension scheme.

Should a property be the only asset in my portfolio?

It can be, but we would recommend that a property forms part of a more broadly diversified portfolio. We can advise you on your financial planning or alternatively just put in place a scheme to receive funds either directly or from and existing pension and facilitate the property purchase.

How much will it cost?

A typical self administered pension structure will cost a minimum of €1,500 per year to maintain. A typical scheme will cost 1% a year to maintain. This fee is made up of varying costs including administration, accounting, advice and custodianship. You can also expect to pay a set up fee of €1,500.

These fees, as well as any other costs associated with the property can be billed back to the scheme. Other costs may include service charges, management fees, repairs and maintenance or refurbishment costs.

How much do I need to have in my pension to make this a realistic proposition?

In order for buying a property into your pension to be a sensible proposition we suggest that you should have an existing fund of in excess of €100,000. However we have facilitated clients spending from €50,000 upwards.

To discuss purchasing a property with your pension contact Donal Milmo-Penny at or contact us here.

(01) 662 9208

55 Ailesbury Road, Ballsbridge, Dublin 4, Ireland

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